The term omnichannel retailing is widely used and experts claim that in the future only omnichannel retailers will survive. But there’s good news - the approach is not only one of the best ways to create a better customer experience it also helps to overcome some challenges that the present-day multichannel approach poses to retailers. In this article, we’ll explain the term, take a look at the evolution of omnichannel retailing, and consider some shining examples.
Definition - what is omnichannel retailing?
Omnichannel retailing is an approach aimed at providing customers with a seamless experience across all channels and touchpoints. From the point of view of a customer, it means that you can shop freely without ever noticing how you switch between channels. From the point of view of the company, it means that the touchpoints should be integrated in the course of the omnichannel strategy.
Single-channel, omnichannel, cross-channel and multichannel retailing
Single-channel retailing is the traditional approach to selling things. There is one sales channel and a single-distribution system. Traditionally, it was a brick-and-mortar store, later, single-channel online web-stores came into existence.
Focusing on a single channel minimizes expenses but it also means minimal revenues.
Multichannel retailing is an approach when a company sells in several channels. It can be an offline shop and a website, or multiple online channels (e.g. a web store, marketplaces, and social media), or even all possible channels (e.g., physical stores, catalogs, e-commerce platform, online marketplaces such as Amazon and eBay, mail orders, telephone ordering, etc.) - but without an intended connection between the experience in different channels.
A multichannel approach helps the company reach a wide variety of customers. And the customers, in this case, can choose a convenient channel. The companies using multichannel retailing not only sell more than those using a single channel, they also can gain a competitive advantage with each channel.
With a multichannel approach, inventory management, order processing, customer service, and other business aspects are much more complex than is the case in a single-channel approach. Therefore, expenses increase along with revenues.
Omnichannel retail implies embracing all the channels that are relevant to the target audience and then ensuring a high level of integration among them.
For customers, omnichannel shopping is much more convenient than even the multi-channel experience as they can shop across the channels without focusing on them, always keeping in mind what they had done in each channel. For example, when a customer comes to the offline shop of an omnichannel retailer, the shop assistants know their preferences and purchase history. When a customer picks items in an app, they appear in a cart on a website, maybe with a follow-up email. This approach is becoming more and more popular because it delivers the most consistent and personalized experience to customers.
But it’s also beneficial for retailers too and not only because it drives sales and customer loyalty. The integrated channels mean integrated business processes. Whereas a multichannel retailer struggles to manage purchases and order fulfillment from various channels, an omnichannel retailer has everything set up so that there are no channel conflicts. Instead of managing multiple channels separately, you can manage the whole integrated system within one strategy.
Some experts single out the term “cross-channel retailing” emphasizing that it means only partial integration of multiple channels or full integration of several, but not all, channels. Also, the users’ interaction is not completely free and seamless across all the channels but they do have a more seamless experience than with multichannel retailers. Though, this is a rather subtle difference and is a situation that often appears only as an intermediate stage on the way to the omnichannel strategy.
The challenges of omnichannel retailing
One of the most challenging parts of going omnichannel is to start thinking in a new way. To overcome all the challenges we’ll describe below, you first have to step away from thinking in terms of separate channels.
Planning expenses and structuring the budgets
Transforming your business to meet omnichannel retailing requirements may appear quite expensive. You have to plan for these expenses. Many companies also have to restructure their marketing budget, because, in a multichannel approach, it’s managed separately for online and offline marketing. Whereas it should be unified when you go omnichannel.
Integrating the channels and systems
Your brand message and product information must be consistent across all channels. All systems and software must integrate seamlessly. You’ll have to gather all the customer data from various sources for analysis and integration.
Ensuring a proper technical foundation
The legacy system may hinder your progress considerably so you should check whether your ERP, CRM, PIM and other software meet all the requirements and integrate seamlessly. Because part of the omnichannel approach is delivering a consistent experience across the channels, most omnichannel retailers enhance their offline stores with tech. In this way, the customers find the same detailed and full information about the products in the shop, as they get online.
Managing human resources
You have to place the right people in top management to take responsibility for the omnichannel strategy. But that’s not enough. You must educate and train all your employees, including shop assistants and customer service representatives to support the new approach. Also, organize your teams to support an integrated approach. Like the siloed budgets we mentioned above, separate teams should be merged. You can’t have separate online and offline marketing, or sales teams anymore. They won’t work efficiently in the omnichannel strategy.
Updating internal processes
It is essential that you have the means to check the up-to-date inventory status in a consolidated supply chain process. Transportation and order fulfillment must be reconsidered. Some companies turn their offline stores into order fulfillment centers, some establish new automated pick-up points.
Also check our article about the top 20 challenges for an omnichannel approach.
Omnichannel retailing trends
With an omnichannel approach you have to take personalization to a new level when compared to multichannel retail. You need to collect, analyze and leverage the data from multiple user touchpoints. The customers should get personalized service wherever they are, be it on the phone, in a physical shop or on a website.
Seamless experience across devices
Users expect to switch between devices when shopping. For example, they may start browsing on a PC, add items to the cart, and then continue shopping in the app without having to add the chosen items again. The same thing is true about making requests for customer support. Make it possible for users to pick up where they left off.
Make the check out easy for customers regardless of the channel. Who wants to enter the billing address, 16-digit credit card number, expiry date, security code, and other data to complete their purchase in the age of contactless payment and blockchain solutions? Taking into consideration the personalization trend, it’s especially relevant to remember the data of repeat customers. At the same time, you must still grant data protection.
Augmented reality apps offer customers an easy and interactive way to try things out before they buy them online, to visualize products in the real world. There exist today apps and in-store technologies that can project how you look in a new outfit. There are also make-up visualization apps and AR apps through which you can visualize the furniture that you’re planning to buy in your room.
Omnichannel retail experience
Many companies are already implementing an omnichannel retail strategy but only a few of them achieved the wow- effect.
The grocery chain allows customers to create wishlists by scanning in-store and from home. At the same time, Walmart is growing the number of physical pick-up points and delivery options. Geofencing technology alerts employees when a customer is coming for a pick-up giving them time to prepare the order. Walmart has even developed a 3D feature to make shopping for homeware more convenient.
Sephora provides everything to make shoppers feel beautiful and ensure that they are satisfied with their choice. There is a color-match search app, an appointment-making chatbot, a cross-channel, cross-device customer reward program, augmented reality fitting rooms, and many more diverse features to create a holistic and consistent experience.
The pharmaceutical retailing company allows users to talk to real doctors through its app, and then pick up the prescription in a Walgreens shop. They’ve also made refilling a prescription fast and simple, and they remind customers about their scripts so that they don’t forget them.
- Start where you already have customers. Omni retail doesn’t necessarily mean being everywhere. It means creating a seamless experience across all the channels relevant to your customers.
- Rethink your offline stores. Despite the growth of e-commerce, physical presence still matters. But today, offline shops have become not just points where products are sold but places where customers engage with the brand.
- Make every interaction omnichannel. Not only sales but also customer service, loyalty programs, and returns. The customers should be able to contact the company, gain and redeem loyalty points and return items that don’t fit across the channels.
- Measure success correctly. You’ll have to change your approach to measuring success. For example, you shouldn’t compare online and offline sales because the buying decision is not made on one channel only. Many shoppers first research online, then try an item and buy it offline. But there would be no sale without you offline presence.
Because omnichannel retailing is more convenient for the customers, it increases sales and loyalty. It can make things easier for the retailers, if they take an omnichannel approach and develop a strategy where their internal processes work as a holistic system. You don’t have to be literally everywhere - just where your customers expect you to be. But the interaction between your business and the customers should be seamless. The companies that succeed in creating an omnichannel experience made it consistent across all the channels and devices and focused on personalization. It’s also important to offer a simple and secure checkout. Another trend is to create a real-life-like experience using Augmented Reality for shoppers who buy online.